Payment of Bonus

Every Diwali, your neighbour’s office gives him a “bonus”, and every year there is an argument in the building about whether it is a gift, a reward or a right. Is it something the employer may give when he feels generous, or something he must give even in a bad year? The Code on Wages treats bonus as a statutory entitlement with a guaranteed minimum, a profit-linked maximum, and a formula in between.

In two minutes

Under Chapter IV of the Code on Wages, 2019, every eligible employee who has worked at least thirty days in an accounting year must be paid a minimum bonus of 8⅓ per cent of wages or ₹100, whichever is higher, even if the employer has no profit, and when there is an allocable surplus the bonus rises in proportion to wages earned up to a maximum of 20 per cent.

The rest of this chapter

The full explanation, the cheat sheet, every previous-year question at every mark weight, the quiz and the answer skeletons are part of Labour Law and Industrial Relations – I on LexBlox Semester. Sign in to unlock the subject, or read Module 1 of Legal Language and Writing free.